Eight South Korean securities firms recently applied to manage two venture capital fund programs operated by Korea Growth Finance Investment Management, marking a strategic shift from real estate project financing to venture capital investments. The applications target the Climate Tech Fund 3, which received 23 total applications, and the Mid-sized Enterprise Value-Up Fund 3, which received 17 applications. Securities firms are pursuing this opportunity to replace declining real estate PF revenue and establish relationships with early-stage companies that could generate future investment banking deals including IPOs, M&A advisory, and corporate bond issuances, aligning with the government's productive finance policy framework.
Securities Firms Apply for Climate Tech Fund 3 and Value-Up Fund 3 Management
Korea Growth Finance Investment Management announced the application status for general partner (GP) roles in two fund programs. The Climate Tech Fund 3 received 23 applications from asset management firms, while the Mid-sized Enterprise Value-Up Fund 3 received 17 applications.
For the Climate Tech Fund 3 small-category track, Daishin Securities partnered with Prologue Ventures as co-GPs, and Yuanta Securities applied independently. In the large-category track, Shinyoung Securities formed a co-GP partnership with BSK Investment.
Securities Firms Form Co-GP Partnerships for Fund Applications
All securities firms applying for the Mid-sized Enterprise Value-Up Fund 3 adopted co-GP strategies with specialized investment partners.
DS Investment Securities formed a consortium with its affiliate DS Investment Partners. Meritz Securities partnered with Rhino Asset Management, while BNK Investment Securities joined forces with K&T Investment Partners.
SK Securities collaborated with K&T Investment, which recently obtained a new technology business finance company license. NH Investment Securities partnered with Synergy IB Investment for the application.
Securities Firms Shift from Real Estate PF to Venture Capital Investments
Real estate project financing served as the core revenue source for securities firms' investment banking divisions. The real estate market downturn and high interest rates contracted the PF market, prompting securities firms to strengthen their venture capital operations as an alternative.
Investing in companies at early stages establishes relationships that create future financial business opportunities. When invested companies grow and go public, the securities firm gains advantageous positioning to secure lead underwriter roles for the IPO.
Early-stage investments provide foundations for securing IB deals throughout corporate growth cycles, including M&A advisory and corporate bond issuances.
Aligning with the government's productive finance policy allows securities firms to build track records as policy fund suppliers, creating advantages in future fund allocation programs.
An investment banking industry official stated that securities firms' recent venture capital investments serve as bridgeheads for conducting financial business aligned with corporate life cycles, noting significance not only in investment returns but also in expanding deal sourcing networks.
FAQ
How many securities firms applied for Korea Growth Finance fund management roles?
Eight securities firms applied for general partner roles across two Korea Growth Finance Investment Management fund programs: the Climate Tech Fund 3 and the Mid-sized Enterprise Value-Up Fund 3.
Why are securities firms entering venture capital fund management?
Securities firms are shifting to venture capital investments to replace declining real estate project financing revenue and to establish early-stage relationships with companies that generate future investment banking opportunities including IPOs, M&A advisory, and corporate bond issuances.
